Thrift in Early 20th-Century America and Today

Andrew Yarrow, CFED, 9/29/2014

The United States is not a thrifty nation and "thrift" is often seen as an antiquated value in a society in which consumption is encouraged and most Americans either don't or can't save money. But that was not always the case. In early 20th-century America, thrift was the rallying cry for many civic, professional, business, and other organizations and was enthusiastically embraced by millions.

The United States is not a thrifty nation and "thrift" is often seen as an antiquated value in a society in which consumption is encouraged and most Americans either don't or can't save money. But that was not always the case. In early 20th-century America, thrift was the rallying cry for many civic, professional, business, and other organizations and was enthusiastically embraced by millions.

The YMCA, teachers, the banking industry, government, temperance advocates, anti-poverty activists, every President from Teddy Roosevelt to Herbert Hoover, and many other strange bedfellows played central roles in defining and promoting thrift. The movement's many components and its philosophy were presented in books, pamphlets, juvenile and adult short fiction, posters, cartoons, and even silent films. Thrift was taught in schools and factories. This virtue was described and promoted during the annual National Thrift Week that was kicked off each January 17 on Benjamin Franklin's birthday, from Gotham to small-town America.

Thrift represented a quest for control over an array of roiling social problems. Profligacy and waste threatened lives, businesses, the environment, and the country's strength; poverty was a daily threat to the well-being of millions; and consumer society threatened values of restraint and modesty. These threats galvanized different people and groups with different concerns and agendas. For a time, they united under the banner of thrift, using a common language to respond to disparate problems.

Fast-forward from the 1920s to 2014: Although the United States is by many measures the world's wealthiest country, the median assets of an American adult, about $53,000, are below those of 15 other countries. Our national savings rate, which stayed above 10 percent into the early 1980s, plummeted to zero in 2005, only to regain a little ground since the Great Recession. Still, the 2013 savings rate of less than 4 percent is a far cry from what individuals or the nation needs for economic health and is only a tiny fraction of what early 20th-century thrift advocates proposed. But even these alarming aggregate statistics dramatically understate the problem. Well-to-do Americans are doing just fine when it comes to saving, building up substantial fortunes in securities, real estate, and other investments. Since the savings rate is an average, the healthy savings of the affluent are counterbalanced by a vast swath of the population with minimal savings and a similarly vast swath who have no savings and are, in fact, mired in debt.

We live in a society in which too many who can save don't, and too many simply don't earn sufficient income to be able to save. Without savings, we are less able to take care of future needs, less able to provide the next generation with a down payment on a good life, and less able to help others in need. While the United States remains an attractive destination for foreign investment, our own people's lack of savings diminishes the pool of funds available for investment in current needs or new ideas, products, or businesses. Without private savings, there is less money available for the private and public investments necessary for a flourishing economy. Private saving is the major source of funding for investments that enhance productivity and, in turn, raise real wages and living standards.

The numbers are grim. Many upper-middle-class Americans have frighteningly little in the way of savings, but much of America's savings crisis stems not from either rampant consumerism or individual character flaws but from the extraordinary degree of socioeconomic inequality that has developed in the United States since the 1970s. The average net worth of the top 1 percent of households is about $16.4 million, whereas the poorest 20 percent of the population had negative net worth averaging -$27,000 and the second poorest quintile had average net worth of just $5,500 in 2010. Approximately one-fourth of Americans are in debt and have no savings.

Although the early 20th-century thrift movement waned in the 1930s, do many of its ideas have relevance in the 21st century? Does an idea predicated on wise resource use have new meaning today, at a time of high public and private debt, when the economy is floundering, the middle class is strapped, the Earth faces environmental threats, and profligacy and waste seem more widespread than ever? Can a new iteration of thrift, recalibrated to contemporary social realities, illuminate a path to a better future?

Andrew L. Yarrow, a historian, public-policy professional, and former New York Times reporter, is the author of the forthcoming book, "Thrift: The History of an American Cultural Movement."